Retired home owners face repossession as banks refuse to extend mortgages

Hundreds of thousands of retired home owners face have having their homes repossessed as banks refuse to extend their mortgage terms.Lenders have imposed tight age restrictions on elderly borrowers who have been unable to pay off their mortgage before reaching retirement.

Falls in their investments as a result of the worst economic crisis in a generation mean many have been left with ongoing debts. As many as one in six retired home owners still have a mortgage, according to latest figures.

It means 1.35 million people in retirement still have an average mortgage of £50,100, an increase of £8,000 from a year ago.

Lenders have cut the maximum age they will lend to amid the credit crisis, with many introducing a cap of 65 years old.

As a result, retired home owners with a mortgage are struggling to find new deals and face being evicted from their properties if they do not have the cash to pay off their remaining home loan with one lump sum.

Politicians and mortgage experts said it is the latest evidence of how banks are tightening their lending criteria amid the recession despite billions of pounds in financial support from the taxpayer.

Grant Shapps, shadow housing minister, said: “Despite years of hearing Gordon Brown boast about how he had ended the housing boom and bust, people are now having to work longer and retire later on less money. This latest news will certainly send chills down the spines of thousands of hardworking people who had previously thought that they might be able to retire in comfort.

The majority of lenders cap lending to borrowers up to the ages of between 65 and 75 years old, having never previously had such limits in place.

Mortgage brokers said they are potential options available to those whose mortgage deal comes to an end in retirement. These include approaching lenders for an extension to the mortgage term, remortgaging or getting children to guarantor their elderly parents’ mortgages.

With the number of home owners falling behind with their mortgage payments reaching a 12 year high, lenders have been told by the Government to use repossession as a last resort.